Public bodies, private businesses and even some individuals now create, exchange and store data and communicate with each other almost entirely by electronic means. The volume of such Electronically Stored Information (ESI), even in small organisations, is immense because of the sheer ease of creation, transfer and storage.

The problem with ESI in litigation

The problem with this in litigation is that it can be difficult if not impossible for a party to gauge the scope of a “reasonable search” for ESI under CPR Rule 31.7 and PD31(2), both in relation to its own disclosure and that of its opponents.

In Goodale & Ors v The Ministry of Justice & Ors [2009] EWHC B41 (QB) Senior Master Whitaker, Chairman of the working party which drafted the new practice direction on ESI, has given timely and highly practical advice on how the parties and the court are to determine the scope of the search for ESI, how to make it proportionate and how to do it correctly first time, without the court having to order it to be done again at great expense.

Context and issues

The case concerns a group-action in which Opiate Dependent Prisoners seek redress from the government over the latter’s policy of ‘one size fits all’ detoxification procedures. Many prisoners complain of suffering and one is alleged to have died as a result of the policy.

The issue here was whether the Ministry of Justice, as defendants, should have to make any disclosure of ESI. They had refused to do so, despite having agreed to disclose their paper documents. This in itself made the case unusual, since the customary debate is over the extent of what is reasonable in the search, not whether the search should be conducted at all. The Master found that standard disclosure should be ordered (as will happen in the majority of cases) and hence that the defendants must conduct a reasonable search for all documents, including those in ESI.

Dealing with the practicalities

Here is the meat of the judgment. Since the defendants had provided almost no information about their ESI, no one could say with any certainty what was available, where it was, nor how much it would cost to search it, let alone how relevant any of it was. The defendants proposed that the parties and the court consider the paper disclosure and then, at some later stage, decide what more might be needed by way of ESI disclosure.

The Court rejected this. It emphasised that the extent of the search was not simply to be open-ended and that it is for the Court to control the exercise to make it proportionate to the issues at stake.

At the moment we are just staring into open space as to what the volume of the documents produced by a search is going to be. I suspect that in the long run this crude search will not throw up more than a few hundred thousand documents. (Para 27)

1. First, start with the key people ‘at the top of the pyramid’ and use a staged, incremental approach. Often, that may suffice since the key documents are likely to be in the ESI owned by these most important players.
2. Second, consider ‘key word’ searches (to be agreed) against some or all of those key players’ ESI stores. This is a relatively crude method, but it will give some indication of what might be uncovered and how much there is of it.
3. Third, with a rough idea from the keyword searches of the volumes involved, use specialists and specialist software to fine-tune the results and de-duplicate.
4. Then, fourth, you move to reviewing with real people.

The ESI Questionnaire

Importantly, the judgment annexes to it the new proposed ESI Questionnaire. This is now a publicly available document (it is unlikely to become a Practice Direction until later this year) and hence it is likely that parties will be encouraged to adopt it as best practice.

The Questionnaire is not intended as a formulaic, tick-box list adding another layer of costly bureaucracy onto the litigation process. Rather, it is a helpful guide to issues which might arise and of which only some may be relevant to a given case. Indeed, the Court’s first step will be to decide whether the case warrants using the Questionnaire at all, and if it does it may decide on a modified version of it. This should then make everyone focus, at an early stage, on what is actually helpful for the case in question. The judgment itself is an excellent example of how active case management by an involved judge can adapt the Questionnaire to the circumstances.

In summary

This is a short, succinct judgment which explains not just the steps involved but stresses the need for all parties to focus on why the ESI disclosure is necessary. The goal is not to add burdens (and costs) to cases which do not merit them, nor to force disclosure for its own sake.

But equally the judgment shows that the courts will not accept that there should be no or limited disclosure merely on the grounds that it will be expensive or inconvenient for the party concerned to provide it.

While the less technically and less technologically minded judges may have struggled with some aspects of ESI disclosure, this judgment, backed up the ESI Questionnaire, provides a clear and understandable roadmap for them, as well as for lawyers, executives and claims managers. Welcome to the future of disclosure.

Related posts:

1. Why ADR can be important in litigation ADR (Alternative Dispute Resolution) is something that the English...
2. New case on disclosure & privilege In the recent case of Expandable Ltd. v. Rubin,...
3. Legal 500 calls Sedgwick London “an excellent practice” Legal 500 have given Sedgwick London an excellent write-up...

ADR (Alternative Dispute Resolution) is something that the English Courts tend to encourage in the process of litigation. Normally, at least in the Commercial Court, the parties will be required to confirm by the time of the Case Management Conference what steps they have taken to resolve the matter by way of ADR.

In the case of Fitzroy Robinson -v- Mentmore Towers [2009] EWHC 1552 (TCC), Coulson J highlighted two reasons why this can be a Good Thing.

First, he pointed to the expected narrowing of issues that ADR would most probably have brought about:

In its absence, the parties adopted diametrically opposed positions in the run-up to the trial. The distance between them only began to lessen at the start of the the trial itself. The best example of this concerned the Defendants’ case for rectification… Once the real issue became apparent, the Defendants effectively abandoned their rectification claim at the start of the trial, and sought instead to argue that, on the true construction of the Contracts, FRL were not entitled to the monthly instalments without adjustment. That argument was not only a better and more realistic submission in all the circumstances, but it should and would have become apparent to the Defendants much earlier if the parties had undertaken ADR [my emphasis].

Secondly, he pointed to the black and white allegations of dishonesty in the case, about which there was no room for havering or ambiguity — either the Claimant was lying or the Defendant was.

The nature of the allegations involving Mr Blake and Mr Thompson leaves no room for ‘fudge’; in relation to a number of the key elements of the story, everyone agrees that one or other man must not be telling the truth. It seems a pity that the parties were not able even to attempt to resolve their differences by way of ADR, so as to avoid my findings on these issues being made in a public Judgment [again, my emphasis].

In other words, ADR might well have avoided some rather disagreeable, and damaging, washing of dirty laundry in public.

So the next time you have to address the question of ADR, take 30 minutes or so think about the circumstances of the case and all the ramifications around it and see whether ADR might be more than a mere formality to be ticked off as ‘considered and not appropriate in the circumstances’ on the CMC check-sheet.

Related posts:

1. Litigation tsunami? The front page splash in The Lawyer yesterday was...
2. Authority and Claims Co-operation In the recent (24.10.08) case of Markel –v- Gothaer...
3. KNIC wins case against London London Market reinsurers have ended their long-running Commercial Court...

WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.

Calling it “basically no more than five rectangular strips of paper,” Fed chairman Ben Bernanke illustrates how much “$200″ is actually worth.

What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world’s largest economy.

“Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…” said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. “You know what? It doesn’t matter. None of this—this so-called ‘money’—really matters at all.”

“It’s just an illusion,” a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. “Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless.”

According to witnesses, Finance Committee members sat in thunderstruck silence for several moments until Sen. Orrin Hatch (R-UT) finally shouted out, “Oh my God, he’s right. It’s all a mirage. All of it—the money, our whole economy—it’s all a lie!”

Read the full, terrible truth here. And then go home to tend your garden.

Related posts:

1. The smart money I had a very good day out yesterday, courtesy...

Water—or the scarcity of it—is not something people give a lot of thought to. But consider these facts:

1. Demand for clean water will rise by 100% between 2007 and 2040.
2. Irrigation for farming uses 60% of all water taken from rivers and aquifers globally.
3. While the world produces twice as much food as it did 25 years ago, it takes three times as much water to do so.
4. To produce 1kg of rice takes 2,000-3,000 litres of water.
5. 1kg of instant coffee takes 20,000 litres (yes, that’s twenty thousand).
6. 1 litre of milk takes 4,000 litres of water.
7. 1 hamburger takes 11,000 litres of water.
8. 1 cotton T-shirt takes 7,000 litres of water.
9. Already, 400 out of China’s 600 biggest cities are short of water.

So we can expect to see taxation on water, increased use of desalination, corresponding developments in agricultural technology, crops designed to rely on smaller amounts of water and an increased political focus on water extraction and use.

Water could be the new oil.

No related posts.

Self-regulation has been much maligned, thinks John Kay of the FT in a thoughtful article in early December 2009 on government intervention in the financial crisis.

He thinks it bad because it distorts competition, increases moral hazard and disrupts private sector initiatives which might be better and less costly.

Oh, yes, and it’s very expensive.

Talking of the potential exaggeration of moral hazard (you want to be seen as in dire straits in order to trigger the bailout), he comments pithily:

“Too big to fail” is a powerful barrier to entry, because no newcomer to an industry begins by being too big to fail. The lending operations of banks are profitable once more – who couldn’t trade profitably if the government underpinned their liabilities? Pity Warren Buffett, whose debt is downgraded because his well-run insurance business remains in private hands while his principal competitor, the failed AIG, basks in the credit of the US Treasury.

His over-arching conclusion is that “the principal mechanism of risk control is self-regulation by the sector”, i.e. each party ensuring that its counterparty is someone with whom it is safe to do business.

The failure to exert proper diligence was the product of optimistic beliefs about what regulation and complex risk-control mechanisms could achieve, the nationalisation of many mechanisms of self-regulation, and the inappropriate delegation of regulatory responsibilities to rating agencies, combined with the hubris that is part of every era of financial folly. But instead of renewing these self-regulatory mechanisms, we have effectively abolished them. That will prove an expensive choice.

Related posts:

1. managing cdo risks As news emerges that Merrill Lynch is posting a...
2. Treasury 1, Lloyd’s Names 0 Lloyd’s Names have lost a legal challenge against the...
3. RMP -v- Brent: What the decision means On April 22nd 2008 Lord Justice Stanley Burnton handed...

Toyoto is not having a good time. A couple of days back I wrote about the Toyota slow-motion PR wreck. Yet here is another perspective on the whole matter from Ed Wallace on Business Week.

He cautions, soundly, against knee-jerk reactions and suppositions, citing very very biased reporting and investigation in the cases of Audi, Suzuki (do you remember the rolling-over jeep?) and Firestone tyres. According to Wallace, almost everything in those cases was invented, there being, in truth, either no fundamental defect or one that was minor, limited and quickly remedied.

Talking about the Audi 5000 incident in particular, Wallace is instructive:

In the 60 Minutes piece on Audis’ unintended acceleration that put this story over the top, they brought in William Rosenbluth to prove that Audis were defective on camera. As 60 Minutes correspondent Ed Bradley said, “We took a car that had already been involved in two sudden-acceleration incidents and, without his foot on the gas pedals, showed it could do this.” Again from the book, Junk Science[1]: “… and 30 million viewers saw it with their own eyes.” What they saw was the gas pedal apparently moving under its own power.

But what the viewers didn’t see was also revealed in Walter Olson’s column, “It Didn’t Start with Dateline NBC:” Off camera, they had drilled a hole in the vehicle’s transmission and pumped extreme high-pressure air into it, which had the effect of moving the gas pedal down without the driver pressing it.

The audience and all of America came to believe that this Audi with two black marks against it was possessed. In reality, it was rigged.

As you’d expect, an Audi official appeared on that broadcast. He said his company had investigated these incidents and could find nothing wrong with their vehicles. Nobody believed him.

So it will be interesting to see what happens here.

Related posts:

1. Toyota D&O claims Oh dear. The train-wreck-in-slow-motion that is Toyota’s current crisis...

Just when you thought it was all over, safe to go in the water etc, it looks like the banks are going to get hit all over again. Mrs. ReRisk has been predicting this for some time and it looks as if she is going to be vindicated.

From data compiled by DeMontfort[1] University, Savills estimate that there is £38bn of negative equity currently on investment properties but this might rise to £50bn once you factor in the drop in the underlying land values, or 25% of the entire lending book in round terms. Shopping centres are particularly badly affected, with as many as 1 in 5 capable right now of being put into receivership.

Accordingly, the banks are said to be doing what they can to keep the loans viable, even if it means only paying back the interest. The last thing they want is for the loans to materialize on their books.

But sooner or later, you have to guess that they will. One somehow doubts that anyone is squirrelling away the odd bonus payment to offset this.

Source: BBC News

Related posts:

1. Toyota D&O claims Oh dear. The train-wreck-in-slow-motion that is Toyota’s current crisis...
2. Does anyone wanna get mellow? Thus asked Ted Nugent in the midst of one...

Building Blog has a good piece on the recent mudslides in LA, which in turn followed the denuding of the hills by raging bush-fires.

As one commenter notes, how anybody could think that a few concrete barricades would hold back a 50mph mudslide, embedded with boulders and other large debris, is hard to fathom.

(pics by Irfan Khan for the LA Times).

What is also hard to fathom is why people persist in building in obvious places of danger. And why they are allowed to. It’s a little like the people who move to the coastal regions of the SE US — it’s only a question of time before Bad Things happen to your house, but people lack the imaginative capacity to see that, or believe that it will happen to them.

For the title of this piece, I refer you to the first comment on the Building Blog entry which quotes this extract from the LA Times:

P. Michael Freeman, chief of the L.A. County Fire Department, acknowledged that crews were operating on weather forecasts that turned out to be incorrect. “I think it’s imperative that everybody understand the unpredictability of predictions,” Freeman said.

There’s a Video Guide to How Mudslides Work if you find it difficult to imagine how (basically, Slope + Loose Mud + Water = Disagreebleness x Lots).

Related posts:

1. No global IMF In an article called Can the US Do An...

Oh dear. The train-wreck-in-slow-motion that is Toyota’s current crisis has got a lot worse today with the announcement that they are having to recall all their Prius models worldwide to sort out brake problems. Toyoda-san, the grandson of the founder, can’t be having a good day.

What sort of claims will emerge from this? Product liability perhaps, though the fact that the cars have been recalled is likely to mean that there will not be that many incidents now and hence nothing to which such claims could attach. Product recall plainly, though one wonders just at what level Toyota have bought cover.

But we could also see some pretty large D&O claims, not least because, despite Toyoda-san’s words today (he said that they would now be actively seeking out potential defects), it’s all been too little and too late — Toyota seem to have been consistently on the back foot, responding to events rather than seeking them out. Directors will be asked why they did not do anything sooner, and held accountable for not having done so.

And the sheer number of different models affected (now almost more than those unaffected) makes it look as if all their cars are shoddily put together. The long-term effect on Toyota, insurance or not, is going to be catastrophic.

Related posts:

1. Toyota: another view Toyoto is not having a good time. A couple...
2. AON plans to outsource claims? In addition to moving to Docklands, perhaps, AON are...
3. Fraud rising, but what else? AON are warning that fraud is on the rise...

Courtesy of Mr. Reid, though “the imagery comes from NASA’s Moderate Resolution Imaging Spectroradiometer (MODIS) satellite’s Rapid Response System which provides near real-time imagery of the Earth’s surface.”

Related posts:

1. Not waving but… The Big Easy appears to be slipping under the...